The first time Professor Philip Butler commercialised his academic research he received a cautionary letter from the Vice Chancellor.

"He said 'do it, publish books, play on the stock market - just so long as it doesn't affect your university work'."

It's a measure of how attitudes have changed since the late 1980s that the memory now evokes a hearty laugh from Butler, a physics professor and leader in research commercialisation at the University of Canterbury. These days it's standard for New Zealand universities to include a commercialisation arm, and there is a plethora of agencies, grants and incubators dedicated to transforming promising research into bankable ventures.

On recent evidence you'd suspect that all this endeavour is starting to pay off.

Promising 'spinout' companies new to market include StretchSense, whose sensor product, developed at the Auckland Bioengineering Institute, has application to four distinct markets; AirQuality Ltd, another University of Auckland spinout with an air quality testing system of potential value to property buyers, among others; and Mars Bioimaging, the Canterbury-based diagnostic imaging startup co-founded by Phil Butler and his son, clincial radiologist Dr Anthony Butler.

So can we assume that New Zealand is getting better at producing spinout companies? The Butlers answer with a qualified yes, and highlight the new attitude.

"I've been in the university system for less than ten years, and even in that short time I've noticed a cultural shift," Anthony says.

"It's no longer the view among academics that you only get involved in commercialisation to make money. There's now a recognition that if you have a good idea or product and you want it to have an impact on society, then you need to take it through to commercialisation."

Mars Bioimaging sprang from a partnership between the University of Canterbury and the European Organisation for Nuclear Research (CERN) to develop colour X-ray technology capable of viewing tissue in more detail.

With funding from the Ministry of Business, Innovation and Employment (MBIE), the university's commercialisation arm Canterprise, and private investors, the company has already sold the technology into the diagnostic market and is poised to enter the world of disease and drug research.

Phil Butler says the development of technology transfer organisations such as Canterprise and UniServices at Auckland has been essential to help spinout companies like theirs get cracking.

He is also of the view that New Zealand leads Europe on commercialisation, while lagging behind the US. "There are a variety of mechanisms out there now and I think that variety is a strength."

Yet there is still plenty of room for improvement, according to the Butlers. The notion that the process of commercialisation involves two distinct phases in which the scientists step aside for the money men is a persistent fallacy, Anthony says.

"From the beginning we've said you need a commercialisation plan that parallels your R&D process. You have to get that commercial expertise in early to direct what you are doing ... or lose years of lead time."

UniServices sees itself as setting the pace among Australasian university commercialisation agencies. Its general manager of technology development Will Charles says it earns revenue from a range of activities with industry, including contract research.

As for numbers of successful spinouts from Auckland versus the three biggest Aussie universities, "we produce as many as them, if not more".

He credits his organisation's sharpened focus on market validation as a key reason for recent successes, and offers due thanks for the likes of the government's leveraged Pre-seed Accelerator Fund (PSAF).

Run out of the MBIE, the fund aims to improve the commercial capability of public research organisations by assessing the potential of ventures at an early stage.

The relatively modest $6 million fund has had an outsized impact, Charles says."It's accelerated our ability to make early stage investments and to demonstrate on campus just what is possible. We'd like to see that expanded a bit."

UniServices matches the fund dollar-for-dollar, and because it's government money it's forced it to put good governance structures in place around investment decisions, he says.

"We set up investment committees populated by external experts and seasoned entrepreneurs who opine on whether we should invest or not. It's improved both the volume and the quality of what's coming out of the university."

One example is StretchSense, which after being vetted by an investment committee received early help from UniServices.From a standing start in late 2012, the company recently moved to expanded premises in Onehunga and already has enough sales to cover costs for the next year.

The StretchSense product is a stretchable capacitive sensor worn on the skin that can measure body motion without interfering with that movement.Potential markets include elite athletics, the health and rehabilitation sector, filmmaking and the emerging augmented reality industry. How many other StretchSenses are there in the pipeline?

"We start maybe five companies a year," Charles says. "When you get to 20, perhaps two of those will be going gangbusters, five will be nice little businesses, and the rest crash in a heap. That's the same numbers that venture capital will tell you as well."

And success breeds success, he says. "Once people see a spinout doing well, they start to think 'I can do that'. Then you get an ecosystem going and a group of people who can help the next lot coming through."

The fact that UniServices is also highly engaged with industry helps."If you are attuned to industry problems then you can feed that into the university. "It also helps generate cash flow which enables us to have a reasonable sized transfer function that smaller organisations can't. And scale matters in this business."

For all the recent wins, however, commercialising research remains a tough nut to crack.New Zealand still lacks institutional seed capital, nothwithstanding the work of new funds such as Global from Day One.

"The private sector is starting to step up. But we need ten of those, and even a little bigger," Charles says.The money problem is compounded by a talent and experience shortfall.

"We don't have a pool of serial CEOs. If you went to Silicon Valley or Boston, you'd find people who'd done three of four spinout companies as CEO. Similarly for governance, we don't typically have many people who have been on boards as an engineer or CTO."

Ralf Muller echoes the funding point. Chairman of StretchSense and CEO at Airquality Ltd and a longtime investor, mentor and advisor, Muller has one of the most experienced heads in New Zealand when it comes to high tech commercialisation.

He believes the universities and government need to increase funding of organisations such as UniServices."Their big challenge is to come up with success stories with very limited funds and resources."

Likewise, Muller is not convinced that we have yet created a productive ecosystem linking science, the investment community and business.

"Callaghan Innovation is the right idea, but they're only just getting their feet under the desk. The various commercialisation organisations such as KiwiNet and Auckland's Return on Science are all good steps in the right direction."

But the private initiatives to set up high tech funds in New Zealand have to be considered a failure.

"There is very little in the market, and what there is is basically not a professional fund like you'd find in the States or Europe, but mostly a bit of money from high net worth individuals who want to do something for New Zealand...In my view it needs a more structured approach."

Muller also has reservations about the New Zealand incubator system. "They don't take a risk position themselves; they sell services, some of them, for a certain percentage of equity, but that's not really the support a startup company needs to be successful. The biggest need is the right people with experience who can execute."

Fair comment? Andy Hamilton, CEO of the Icehouse, agrees at least with the philosophy behind Muller's arguments."Any organisation that works with startups needs to be aligned to their success," he responds.

Since 2003, the Auckland-based incubator has been taking an equity position in companies. "We now have equity stakes in 115 companies. What is different is that we don't write a cheque to get that equity stake, rather we help them get ready to look for that investment - but, of course, many don't get there."

Hamilton robustly defends the New Zealand incubation track record."If I just look at our incubator, those companies we work with have created about 850 jobs, and 90 per cent of the revenue is export-related."

"When you consider models like the Icehouse, Powerhouse out of Christchurch and Creative HQ and the Lightning Lab in Wellington we are internationally respected."

He points to angel investment network Ice Angels, which invests $5-7m a year. "That wasn't here ten years ago, and they've just nudged their 50th investment. That's a fantastic recognition of the ecoystem that has been created."

What of Muller's skepticism about funds such as Stephen Tindall's K1W1 and Global From Day One? According to its website, the former has invested more than $100 million of seed and venture capital into startup and early stage ventures.

Suse Reynolds, executive director of the Angel Association of New Zealand, agrees you can always do more. But, she continues, "those funds and those people make an enormous difference. They do catalyse ventures that might not otherwise have the opportunity and they do bring skills, contacts and experience."

Ralf Muller feels far more optimistic about the new technology incubators announced by Science and Innovation Minister Steven Joyce last October. Modelled on the Israeli approach and with a budget of $31.3 million over four years, the incubators will distribute grants and add their own funding to help tech startups plug the gap until investors commit capital.

"It could be a beautiful next step to help commercialise high tech out of New Zealand, matching a new set of incubators with the relevant IP generators," Muller says.

"Another good step would be to establish a fund consisting of a few local professional organisations and investors that could give individual and angel investors a bit of a comfort zone."

Muller notes that New Zealand could learn a lot from Israel, labelled the Startup Nation for its world-leading position in commercialising high tech (Israel has more Nasdaq-listed companies than any country bar the United States).

It does have advantages we can never replicate, such as hundreds of thousands of Russian émigré scientists and engineers.But this country has the upper hand with its reserves of passion and empathy, he argues.

Everyone wants to do something to see New Zealand flourish, and the key ingredient in producing multiple successful spinouts is not money or systems, but people.

"Success or failure in business, in my humble opinion, all has to do with the team involved.

"If they can't execute it will fail, no matter how wonderful the systems and support. UniServices is one of the most successful commercialisation outfits in Australasia. Again, that's not due to any policy or system, but the fact that there is a bunch of very good people working there."